International Credit Bureau Experience: Focus on Eastern Europe

1. International Credit Bureau Experience: Focus on Eastern Europe BACEE Credit Bureau Roundtable Budapest, April 21st 2006 Petr Kucera Managing Director – CCB Czech Credit Bureau CRIF Group © 2006 CRIF

2. International Credit Bureau Experience: Focus on Eastern Europe Table of contents • CRIF Introduction • Why a Credit Bureau? • CEE and CIS markets: benefits from CB • Credit Bureaux development: the road map • CRIF: Competence and Flexibility © 2006 CRIF

3. CRIF international dimension CRIFIntroduction • CRIF is one of the main international groups specializing in the development and management of credit reference agencies and decision support systems for the retail credit markets • CRIF is the leader in Italy, with over 440 client banks and financial institutions and 85% of Italian branches connected daily online with its services • CRIF has been successfully expanding credit bureaux activities in the CEE region (to-date involvement in 4 registries (Czech Republic, Slovakia, Croatia, Russia) • Through alliance with TransUnion, we jointly manage the largest number of bureaux worldwide among international specialised operators. © 2006 CRIF

4. National Bureau of Credit Histories Moscow Tampa Mexico City London Prague Bratislava © 2006 CRIF Milan Bologna

5. Bureaux – CRIF worldwide market place CRIF worldwide marketplace Different types of our Bureaux involvement Credit Bureau: in the emerging markets it is strategic to support and speed up the economy growth; Insurance Bureau: essential in mature markets to streamline operations and strengthen fraud detection; B2B Bureau: essential in mature markets as a strong companies’ support for completing public information and for the early detection of payment delay. © 2006 CRIF

6. CRIF worldwide market place CRIF worldwide marketplace Czech Credit Bureau: • Today: Banking Credit Bureau (June 2002) Non Banking Credit Bureau (launch July 2005) Shared Credit Bureau (launch January 2006)Portfolio Monitoring Services • Tomorrow: Credit Bureau Score Credit Application Processing Credit Anti-Fraud SystemsSME, B2B extension © 2006 CRIF

7. CRIF worldwide market place CRIF worldwide marketplace Slovak Credit Bureau: • Today (operating since 2004): Banking Credit Bureau • Tomorrow: 2006 - Non Banking Credit Bureau Credit Bureau Score Credit Application Processing Credit Anti-Fraud Systems © 2006 CRIF

8. CRIF worldwide market place CRIF worldwide marketplace Russian Credit Bureau: • In partnership with TransUnion and NBCH National Bureau of Credit Histories • Sept ’05 – Launch of Credit Bureau & Application Processing for Credit Cards and Personal Loans • Approx. 400 Banks Members © 2006 CRIF

9. CRIF worldwide market place CRIF worldwide marketplace Croatian Credit Bureau: • Kick off 20 September and go live in May 2006 • In partnership with TransUnion • and HROK - Hrvatski Registar Obveza Po Kreditima © 2006 CRIF

10. Buro de Credito Our Credit Bureau Partners • Ireland • Mexico • Sweden • Russia NBCH • Germany • Germany • Brazil • Poland • Croatia • Canada • Repùblica Dominicana © 2006 CRIF

11. Customer Acquisition Portfolio Management Debt Collection Planning & Development Provider of complex decision support solutions CRIFIntroduction • Credit Reporting(Individuals and SMEs) • Business and financial information (Company profiles, Financial data, Judgements, etc.) • Business Intelligence and decision support systems (Scoring and Rating) • Software and Processing services for management StrategyOne CreditFlow • Collection - Information © 2006 CRIF

12. Positive Data Credit Bureau Benefits International CB models Limitations of a negative Credit Bureau which can be overcome with a positive Credit Bureau model • No distinction of “shade of black” • Missing global view on credit positions of a person • Not sufficient information on risk of overindebtedness • No individual “early warning signs” in worsening macroeconomic situation – leads to general default levels • Substantial reduction of new business generation without positive data. • Possibility to override internal policy or result from credit scoring function with positive record in the Credit Bureau Examples from abroad: • 14 EU member countries operate positive data bureaux • Efforts to switch from negative to posivite in a number of countries (Hungary, Hong-Kong, Latin America, etc.) • Establishments in process only consider postive bureaux (Croatia, Russia, Ukraine, Romania, Serbia, Bulgaria, etc.) © 2006 CRIF

13. Why a Credit Bureau in CEE and CIS market? Why a CB ? • Emerging & Transition Market issues: • Low competition level • Focus on Corporate lending • Low focus on SME lending • No relation with SME & Consumer Current Clients Large Co’s and ‘A’ Clients Commercial and Retail Market Under-Served Market © 2006 CRIF Retail and Small Business market

14. From 3 to 10 years!! From 6 to 12 months CB role in emerging market CEE and CIS markets: benefits from CB • Understandthe basic principles of CB qualities • Aggregate main phases and start the data sharing process • Design the most appropriate corporate structure by thinking globally and acting locally • Technical infrastructure • Quality - auditing process • Commercial policy and evolving plan © 2006 CRIF

15. Why a Credit Bureau in CEE and CIS market? Why a CB ? Benefits for Credit Grantors: • Assess overall indebtedness level of clients • Avoid “Credit Shopping” • Reduce transaction time and costs • Apply rates according to risk level • Increase operation volumes at the same risk level • Helps avoid lending to consumers who cannot or will not repay (History) © 2006 CRIF

16. Why a Credit Bureau in CEE and CIS market? Why a CB ? Benefits for Borrowers (consumers and small business): • Get credit more easily • Obtain lower rates according to own risk level • Be protected against future over-indebtedness • Lower costs of borrowing (Lower risk=lower interest rates) • Security of personal data (Information is only accessed with consent for specific purposes) © 2006 CRIF

17. Challenging puzzle Why a CB ? Bank A : A mortgage from a local bank where salary is paid - Paid monthly - Up to date Leasing company B: A leasing car loan - Paid monthly - Up to date Fourth - Public information & Other: - No court judgements - Applied twice for credit in last 2 years - Never lies on application form - No adverse government records Bank C: An unsecured credit cardfrom a new, foreign bank - Paid monthly - High interest © 2006 CRIF

18. Challenging puzzle Why a CB ? Bank A : A mortgage from a local bank where salary is paid - Paid monthly - Up to date Leasing company B: A leasing car loan - Paid monthly - Up to date Fourth - Public information & Other: - No court judgements - Applied twice for credit in last 2 years - Never lies on application form - No adverse government records Bank C: An unsecured credit cardfrom a new, foreign bank - Paid monthly - High interest © 2006 CRIF

19. Challenging puzzle Why a CB ? Bank A : A mortgage from a local bank where salary is paid - Paid monthly - Up to date Leasing company B: A leasing car loan - Paid monthly - Up to date Fourth - Public information & Other: - No court judgements - Applied twice for credit in last 2 years - Never lies on application form - No adverse government records Bank C: An unsecured credit cardfrom a new, foreign bank - Paid monthly - High interest © 2006 CRIF

20. Challenging puzzle Why a CB ? Bank A : A mortgage from a local bank where salary is paid - Paid monthly - Up to date Leasing company B: A leasing car loan - Paid monthly - Up to date Fourth - Public information & Other: - No court judgements - Applied twice for credit in last 2 years - Never lies on application form - No adverse government records Bank C: An unsecured credit cardfrom a new, foreign bank - Paid monthly - High interest © 2006 CRIF

21. Suggested Credit Bureau data content CEE and CIS markets: benefits from CB • Positive and negative information • Private individuals; sole traders; SME & corporate data • Type of contractsInstalment operations:(Personal/consumer loan; Mortgage loan; Construction savings loan; Investment loan; Operational loan; Leasing; Export/import loan) • Non-instalment operations:(Credit line on current account; Factoring) • Credit cards & revolving operations:(Credit cards; Charge cards; Revolving loans) • Other public & private external databases © 2006 CRIF

22. Credit Bureau services evolutionFrom the delivery of credit reports … CB development: the road map Output Branch APPLICATION FORM -------- -------- ------ ------ Input Credit Bureau Applicant Id and Matching Codes, Number of Contracts, Global Exposure, Credit Behaviour, No. of Banks and Financial Institutions, … © 2006 CRIF

23. … to the management of Decision Processes CB development: the road map Output PUBLIC DATABASES APPLICATION SCORE CREDIT BUREAU DATA & BUREAU SCORE BUSINESS RULES Branch APPLICATION FORM -------- -------- ------ ------ Input Credit Bureau Database Integration, Policy Rejects, Credit Policies, Business Rules, Scorecards, Decision Matrix, … © 2006 CRIF

24. Our experience with outsourcing of decision processes CB development: the road map BENCHMARKING PLANNING MARKET DEVELOPMENT NEW MARKETS NEW BUSINESS AREAS BEHAVIOURAL PORTFOLIO MANAGEMENT APPLICATION PROCESSING FOR PRIVATE CONSUMERS AND SMALL BUSINESS © 2006 CRIF CREDIT BUREAU

25. Legal Security Benchmark Consulting Gap Analysis Certification Operations Technical Marketing To run a World Class Credit Bureau CRIF support is available in the following areas: © 2006 CRIF

26. The right people for you Thank you © 2006 CRIF